BACS Payments: How Employee Pay Works in UK Payroll

BACS (Bankers' Automated Clearing Services) is the payment system behind almost every employee salary payment in the UK. When you run payroll, the actual transfer of funds to employees' bank accounts happens via BACS — a process that takes three working days from submission to funds landing.

This timing matters. If you want employees to be paid on the last working day of the month, you need to submit the BACS payment instruction three working days before that. Payroll software that calculates net pay does not automatically make the bank transfer — you need to either connect to a BACS bureau, use your bank's BACS facility, or manually initiate transfers using the payroll figures.

Mellow calculates net pay for each employee and generates a BACS-ready payment file in the standard format accepted by most UK banks and BACS bureaux. You download the file, upload it to your bank or bureau, and the transfers are processed. Future versions of Mellow will support direct BACS submission via integrated banking connections. For now, the payment file approach is the standard method used by the majority of small and mid-sized businesses running their own payroll.